Search the Internet          Tips  Sites: Finance, Investment

Zee group bought media stakes from Parekh

The chairman of Zee Telefilms Ltd, India's largest private television network, said its corporate group had purchased stakes in two media companies from Ketan Parekh, the speculator at the centre of the Indian stock market's worst crisis in a decade, several Indian newspapers said on Wednesday.

Parekh, known as the Bombay Bull for his aggressive investments in 'new economy' stocks, is being investigated by the Securities and Exchange Board of India. Among other issues, the market watchdog is looking into how Parekh was funded.

He was arrested last month on suspicion of defrauding the state-run Bank of India out of Rs 1.37 billion. On Monday, Finance Minister Yashwant Sinha said Global Trust Bank lent millions of dollars to companies controlled by Parekh.

Recent news reports have also pointed to a funding link between the Zee group and Parekh.

Zee issued a statement earlier this month stating investment companies in the Essel group, of which it's a member, had advanced about Rs 2.2 billion to buy stakes in two media companies -- Amitabh Bachchan Corporation Ltd and B4U. But it had not said from whom the stakes were purchased.

On Wednesday the Financial Express newspaper quoted Zee chairman Subhash Chandra as saying: "We signed the agreement with him (Parekh) on March 8-9. The agreement clearly mentions that he will sell his equity holdings in both the companies (ABCL and B4U) to our group."

The Economic Times newspaper quoted Chandra as saying Parekh had not informed ABCL and B4U that he was transferring his stake in those companies to the Zee group.

"The money had been paid to him in good faith and for this purpose, but Parekh had not even informed these companies" of the sale, Chandra was quoted as saying.

The Business Standard quoted Subhash Chandra as saying the promoters of the Essel Group had decided to record the shareholding on their own books because Zee Telefilms shareholders could object to investments where "proper valuations had not been done".

The confusion surrounding how and when the sale took place, the identifies of the buyer and seller, and the fact the sale was not reported to ABCL or B4U until recent days has cast a cloud over the transaction.

Zee officials were unavailable for comment on Wednesday.

Zee's battered shares have fallen about 40 per cent in April amid concern about these deals.

YOU MAY ALSO WANT TO SEE:
The Capital Markets Crisis

Tell us what you think of this report